What's Right About Software Assurance?

With the first batch of Software Assurance (SA) contracts up for renewal, Microsoft is counting on changes in the SA program to make it more attractive to the enterprise.


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Just over three years ago Microsoft announced its Licensing 6.0 program, which included changing its software upgrades from a purchase to a subscription model.

Under the new Software Assurance (SA) system, companies would pay an annual fee of 25 percent of a server license and 29 percent of a desktop license. In exchange, the customer gets unlimited free upgrades of that particular operating system or application as Microsoft releases new versions.

At the time, it was a tough sell. To many it looked like more of a Revenue Assurance program to guarantee Microsoft a steady flow of income, rather than anything that would benefit purchasers. It meant that customers would start incrementally paying for future upgrades years before Microsoft released the products. In three-and-a-half years, they would have paid the equivalent of a full license cost for a new desktop version, and four years for a server product.

"Buyers should purchase SA if they plan to upgrade to a new version that is released within 3.5 years for desktop applications and operating systems, or four years for server software," said Gartner Inc. research director Jonathan Mein. "Microsoft needs a product release cycle that meets these periods."

But there was no promise that Microsoft would come up with a new product in that time period. If not, then customers paid more than if they had waited for the new release and bought it outright. And that is more or less what happened. The first batch of SA contracts are now coming up for renewal, without Redmond coming out with a significant software release.

In March, Microsoft announced a delay in the release of the next version of SQL server (Yukon) till the first half of 2005. News followed that Longhorn, the replacement for Windows XP, wouldn't be out till the first half of 2006, four-and-a-half years after the release of XP.

SA Revamp

In order to continue the SA program, and without alienating its customers, Microsoft needed to thoroughly revamp it. One option was to release incremental software updates with greater frequency so that updates were guaranteed to occur during the contract period. The other was to stick with the planned releases, but increase the value of SA. In September 2003, therefore, Microsoft released a new SA program with a load of attractive features.

As with the earlier version, the main component is the ability to upgrade the software. But there are number of other options to make it more appealing. Among these are:

  • Home Use Program -- Grants employees use of a copy of Microsoft Office suite products (Access, Excel, FrontPage, Word, Publisher, Visio, etc.) on their home computers as long as they are a primary user of that same product in the office. Employees pay a fee for shipping, handling and administration, but not the full cost of a license.

  • Windows Preinstallation Environment -- Tool for automating software deployment.

  • Corporate Error Reporting -- With Windows, when there is an error, users have the option of clicking a link which sends an error report to the Microsoft support site and receiving data on possible causes and repairs for the problem. This sets up a similar system within the enterprise. Error reports go into a common database where they can be analyzed and fixes developed for ones that frequently crop up.

  • eLearning -- A series of interactive modules customers can load on their networks for training employees. Depending on the type of license, the customer may need to purchase the media kit. More than 30 courses are available, with more coming out. Organizations receive a perpetual license to any courses they receive while under a Software Assurance contract, but don't receive any new material once that contract expires.

  • Training Vouchers -- Vouchers good for training at Microsoft Certified Technical Education Centers. There is a sliding scale based on the number of licenses an organization has. One with 15,000 or more Windows and Office licenses can receive vouchers for up to 175 days of training.

  • Technet Plus -- access to subscription content, managed newsgroups and evaluation copies of software.

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